United States Bankruptcy Court for the District of New Jersey has conditionally approved BlockFi’s disclosure statement, indicating that the company’s reorganization is advancing incrementally.
BlockFi and the Official Committee of Unsecured Creditors issued a joint statement on August 2, 2023, urging all eligible parties to vote in favor of the plan by September 11, 2023.
The successful ratification of the project will facilitate the return of client funds and effectively resolve the Chapter 11 cases.
Once the bankruptcy plan is approved, the lender will recover funds from several defunct companies, including Alameda Research, FTX, Three Arrows Capital, Emergent, Marex, and Core Scientific.
The primary objective is to maximize client recoveries while defending against third-party claims that could significantly erode client assets.
According to the announcement, if clients do not opt out of a voluntary third-party release, they will be exempt from all claims and causes of action that BlockFi may have against them.
This release applies to the vast majority of clients, except for those who withdrew $250,000 or more from their BlockFi Interest Accounts (BIA) or BlockFi Private Client Accounts (BPC) on or after November 2, 2022.
In addition, according to the plan, BlockFi will not reclaim amounts under $250,000 that clients properly transmitted from BIAs or BPCs to BlockFi Wallet and withdrew from Wallet before November 10, 2022, when the platform will be disabled.
Clients with claims less than $3,000, or those who choose to reduce their share to $3,000, will be classified as convenience claimants and receive a one-time cash distribution from the BlockFi estate equal to 50% of their claim.
The United States Securities and Exchange Commission agreed in June to postpone the collection of a $30 million sanction from the insolvent cryptocurrency lender until all creditors are repaid. This amount represents the remainder of a $50 million settlement with the regulator in February 2022.
